LYELL RESOURCES LTD. ANNUAL & FINAL REPORT EL 33 / 2011 Mt Sedgewick Project November 2012 Report Period: 22 nd Nov 2011 to 21 th Nov 2012 David Esser November 2012 2 - CONTENTS Page EXECUTIVE SUMMARY ........................................................................................................... 4 1 INTRODUCTION ................................................................................................................ 5 2 LOCATION & ACCESS ..................................................................................................... 6 3 TENURE ............................................................................................................................. 6 4 GEOLOGICAL SETTING ................................................................................................... 8 4.1 REGIONAL TECTONIC SETTING ....................................................................................... 8 4.2 REGIONAL GEOLOGICAL SETTING .................................................................................. 9 4.3 PROJECT GEOLOGY ..................................................................................................... 13 5 DEPOSIT TYPES ............................................................................................................. 14 4.1 MT LYELL DEPOSITS (C U-AU) ....................................................................................... 14 4.2 HENTY DEPOSIT (A U) ................................................................................................... 16 6 EXPLORATION RATIONALE ......................................................................................... 18 7 SUMMARY OF PREVIOUS WORK ................................................................................. 19 7.1 HISTORICAL EXPLORATION ........................................................................................... 19 7.2 PREVIOUS WORK BY GLOBAL ORE DISCOVERY ............................................................. 20 8 EXPLORATION IN CURRENT REPORTING PERIOD .................................................. 22 9 RECOMMENDATIONS .................................................................................................... 22 10 REFERENCES .............................................................................................................. 23 11 APPENDICES ................................................................................................................ 24 2 3 - FIGURES Figure 1. Location Map showing EL 33 / 2011, ‘Mt Sedgewick‘ .............................................. 5 Figure 2. Mt Sedgewick tenement, access and infrastructure ................................................. 7 Figure 3. Dundas Trough showing major mines and distribution of the Mt Read Volcanics. Mt Sedgewick centred on 384,600mE / 5,354,900mN using GDA 94 MGA zone 55........ 9 Figure 4. Regional geology of Lyell’s tenements in western Tasmania. ............................... 11 Figure 5. Mt Lyell district stratigraphy ( from Corbett, 2001 ) ................................................... 12 Figure 6. Interpretive geological map extending from the Henty mine to Mt Darwin in the south ( from Noll and Hall, 2005 ) ....................................................................................... 13 Figure 7. Interpretive geological cross-section at Eldon and Mt Owen ( from Noll and Hall, 2005 ). For location of section refer to Figure 6. ............................................................... 14 Figure 8. Mt Lyell alteration and mineralisation (from Corbett et al. 2001 ) ........................... 15 Figure 9. Henty geological map ( from Unity Mining website ) ................................................ 17 Figure 10 - Mt Lyell anomalies and potential target, with TMI and first vertical derivative of open file airborne magnetics ............................................................................................. 21 TABLES Table 1: Tenement details ......................................................................................................... 6 APPENDICES Appendix 1: Expenditure statement (Word doc) – Separate attachment ........................... 24 Appendix 2: List of exploration companies and historic exploration at Mt Sedgewick ........ 24 3 4 - EXECUTIVE SUMMARY EL33/2011 comprises a 68 km 2 tenement three kilometres east to NE of the Mt Lyell group of Cu – Au deposits near Queenstown in Western Tasmania. Mt Owen Resources engaged Global Ore Discovery (GOD) to conduct a generative study in the Dundas Trough looking for areas with potential of hosting Mt Lyell type Cu-Au mineralisation. The Mt Sedgewick area was chosen as it has a favourable structural and stratigraphic framework and is covered by younger Cambro-Ordovician sediments deposited in a half graben basin. This annual report describes the work carried out in EL 33/2011 up to the 22 nd November 2012. EL 33/2011, named ‘Mt Sedgewick’ is located in the Dundas Trough approximately 3 km to the SE of Queenstown on the west coast of Tasmania. The tenement is held by Mt Owen Resources Pty Ltd, which is a wholly owned subsidiary of Lyell Resources Limited (Lyell). Mt Owen Resources was acquired from Pangean Resources Pty Ltd (Pangean) in March 2011, by payment of cash and shares. EL 33/2011 has the potential to host a concealed Mt Lyell type Cu – Au orebody at depth. Global Ore Discovery defined several anomalous alteration zones which have the potential to host Mt Lyell style mineralisation at depth. Work during the reporting period comprised historical data compilation and interpretation, although the planned reconnaissance field work did not commence due to budgetary constraints. Mt Owen Resources has subsequently decided to surrender the EL based on having higher priority tenements, and the thickness of cover of the Mt Owen Group sediments (>600m). 4 5 - 1 INTRODUCTION Lyell Resources Limited, through its wholly owned Australian subsidiary Mt Owen Resources Pty Ltd, is the holder of EL 33/2011. Lyell applied for the Mt Sedgewick Project to test for buried Mt Lyell type Cu – Au mineralisation in a highly prospective area, which has had no previous drilling and only limited surface exploration. This annual report covers all the exploration work carried out within EL 33/2011 by Mt Owen Resources Pty Ltd up to 14th of June 2012. Exploration activities during the reporting period included; historical data compilation and interpretation. Refer to Figure 1 for the location map. Figure 1. Location Map showing EL 33 / 2011, ‘Mt Sedgewick‘ 5 6 - 2 LOCATION & ACCESS The Mt Sedgewick project is located on the west coast of Tasmania, situated between the townships of Queenstown to the south and Rosebery in the north. The area can be accessed by the sealed Lyell Highway which is approximately 260 km to the north-west from Hobart. Infrastructure in the area includes several large reservoirs used for mine processing at Rosebery and Mt Lyell, a railway line between Queenstown and Strahan and hydro- electric power with a power line connecting Queenstown and Rosebery (Figure 2). The southern end of EL 33/2011 is located approximately 6 km north-east of Queenstown and the northern boundary approximately 6 km south-east of Rosebery. Access is via the Lyell highway (A10), which passes through Queenstown and then heads north through Rosebery, and then via mining and forestry tracks (Figure 2). Access can also be gained via ‘Anthony Main Road’ which crosses diagonally over the northern end of the lease. The access is poor away from the logging and mining tracks, and must be gained on foot or by helicopter. 3 TENURE The Mt Sedgewick project, held by Mt Owen Resources Pty Ltd, comprises EL 33/2011, covering an area of 68 km 2. Refer to Figure 1. Mt Owen Resources Pty Ltd applied for EL 33/2011 (Mt Sedgewick) based on generative studies by consultants Global Ore Discovery and the tenement was granted on 22nd November 2011. In December 2011 Lyell Resources Pty Ltd purchased Mt Owen Resources Pty Ltd from Bondi Mining Ltd following the latter’s merger with World Titanium Resources. Lyell Resources is now the operator of the Mt Sedgewick tenement through its 100% ownership of Mt Owen Resources Pty Ltd. Table 1: Tenement details Area EL No. Name Holder Grant Date Expiry Date (km 2) Mt Owen Resources EL 33/2011 Mt Sedgewick 68 22/11/2011 21/11/2016 Pty Ltd 6 7 - Figure 2. Mt Sedgewick tenement, access and infrastructure 7 8 - 4 GEOLOGICAL SETTING 4.1 Regional Tectonic Setting The Mt Sedgewick tenement is located on the eastern margin of the Dundas Trough and to the west of the Tyennan Proterozoic metamorphic block. The Dundas Trough is a 250 km long, 10 to 20 km wide arcuate belt containing Cambrian submarine, felsic to intermediate Mt Read Volcanics (Corbett, 2004) ( Figure 3 ). The Dundas Trough is interpreted to be a back arc rift basin, which was subsequently closed during the late Cambrian leading to the uplift of the Tyennan metamorphics to the east and the deposition of the Mt Owen Conglomerate. This was followed by ‘sag phase’ shelf sedimentation and carbonate deposition (Gordon and Eldon Groups and their equivalents) from early Ordovician to early Devonian (Noll and Hall, 2005). The Dundas Trough volcanics and the Ordovician to early Devonian sediments were then deformed and metamorphosed during the Middle Devonian Tabberabberan Orogeny producing north-west to south-east trending faults and associated thrusts, and reactivation of north-south to north north-east trending,